GRASSROOTS/Hank Kalet

The Budget Con

President George W. Bush apparently has a rabbit up his sleeve.
His administration is crafting a five-year budget plan that makes use
of a variety of smoke and mirrors to hide the fact that his fiscal
policies are bankrupting the nation.

According to an article in The New York Times in early January,
the president will build his budget proposal on an outdated deficit
projection to create the illusion that the deficit is larger than it
actually is so that he can claim that his spending plan will cut it
in half by 2009.

The administration will use a year-old estimated deficit figure
of $521 billion rather than the actual $413 billion figure from this
past year. By doing so, the administration can craft a budget that it
says will reduce

the deficit to $260 billion (though the chances of the Bush
administration actually getting the deficit down to that number
remains pretty slim) and claim that it has met its campaign
pledge.

The reality, of course, is far different. Even if the
administration can get the deficit to $260 billion, it will only have
reduced the budget by about 35 percent -- a significant number, to
be sure. Basically, the math on the president's proposal, due in
February, just doesn't add up.

"They are cutting the deficit from a number they never believed
in the beginning," says Stanley Collender, author and analyst, to the
New York Times. "What if they had forecast that the deficit would be
$800 billion last year? Would they take credit for having cut it by
half?"

But even that specious claim assumes that the rest of the Bush
budget is built with solid material. According to the Times, the
budget conveniently ignores the growing costs of the wars in Iraq and
Afghanistan, the cost of the president's suspect Social Security plan
and about $1 trillion in expenses that are expected to come due in
2010. And it relies on revenue projections that are about as rosy as
they come.

Let's take these one by one.

The Iraq and Afghanistan wars: The administration spent $87
billion for Iraq alone in 2004 and already is on the hook for $25
billion for the first few months of the current year. The money is
not included in the budget, but has to be paid for by someone. That
someone is us.

There are no estimates for 2006.

Social Security: The Bush administration is planning a raid on
the 70-year-old retirement program that will have significant short-
and long-term costs to taxpayers and retirees. The administration is
proposing to allow workers to take a portion of the payroll taxes
they pay into the system to fund the program and invest that money in
the stock and bond markets.

Forget for a moment that the proposal is, in economist Paul
Krugman's words, a "bum's rush." Forget that privatization will
undermine the security of the retirement system and that the
so-called Social Security crisis is not nearly as bad as
privatization proponents would have us believe.

The issue, as far as the Bush budget proposal is concerned, is
that the privatization plan carries with it about $2 trillion in
transition costs over the next 10 or so years to cover plunging
payroll tax receipts caused by the Bush privatization plan. That's
about $200 billion a year that won't be coming in as revenue any
longer, revenue that the federal government has been using for the
last couple of decades to balance its books -- or at least to try
to.

Revenue projections: The administration is expected to anticipate
an increase in tax revenues of about $200 billion, according to the
Times, which would be "an increase of more than 10 percent, twice as
big as the jump in 2004, and it would be followed by additional big
jumps for the next five years."

The Times said many analysts believe the revenue projections
overly optimistic.

"Even though the economy grew at a rapid pace of 4 percent in
2004, and corporate profits soared at double-digit rates, federal tax
revenues were only 16.2 percent of the gross domestic product last
year, the lowest level since the early 1950s," the story said. And
tax revenues remain lower than when the president took office four
years ago.

So when the president tells you his budget is righting America's
economic ship or that his spending plan is geared toward the
long-term health of our economy, don't believe him. And watch your
wallet.

Hank Kalet is a poet and the managing editor of the South
Brunswick Post and The Cranbury Press, two weekly newspapers in New
Jersey. His email is grassroots@comcast.net.